Friday, May 29, 2020

Two New FRAND Papers

1.  Stephan Waldheim has published a paper titled Huawei v. ZTE Five Years AfterLuxembourg Locuta Causa Finita? in the Journal of European Competition Law & Practice.  From the "Key Points":
• The national patent court’s approach to Huawei/ZTE is both flexible and workable.
• While a holistic view is taken on whether the seeking of a prohibitory injunction is abusive in the individual case at hand, in the absence of investigative powers, (more) operational criteria are being applied to assess whether the SEP confers dominance to its holder. In principle, there is little to criticise about this practice.
• However, when push comes to shove the national patent courts (still) tend to decide in favour of plaintiffs, i.e. patent holders. Take their dealings with patent pools, for example, or the fact that a case where two opposing offers have both been accepted as FRAND is yet to be seen.
• Whether this is in line with the CJEU’s impetus of striking a fair balance between the opposing interests of patent owners and users may be reasonably doubted.
This is a very informative, yet relatively brief, paper, and I recommend it.  The title is a bit baffling, though.  The fact that Luxembourg (that is, the CJEU) locuta est hardly means that the causa is finita, as witness the paper itself.

2.  Bertram Neurohr has published a paper titled Dynamically Efficient Royalties for Standard-Essential Patents in the Journal of Competition Law & Economics.  Here is the abstract:
Some economists have argued that a reasonable royalty for a standard-essential patent should be based on the patent’s ex ante incremental value. Others have argued that a patent’s ex ante incremental value is insufficient, that a reasonable royalty is more akin to the prize in a winner-takes-all tournament, and that it should reflect the R&D costs associated with both the winning technology and unsuccessful alternative technologies. The results presented in this paper are favourable to the latter view, but with the additional qualification that a reasonable royalty ought to cover the costs of only those R&D efforts—successful or not—that are efficiency enhancing from an ex ante perspective. The notion of ex ante incremental value is core to identifying these efforts and hence to determining what the dynamically efficient outcome is. A reasonable royalty is one that induces this dynamically efficient outcome (i.e. a dynamically efficient level of R&D),balancing the costs incurred by innovators with the benefits that go to implementers and/or consumers. As such, a reasonable royalty is significantly higher than a technology’s ex ante incremental value. High ‘winner’ margins are offset by losses incurred by ‘losers’, leaving a significant proportion of the total
net value generated by R&D to implementers and consumers.
3.  I should note as well that Florian Mueller has posted an important update to his two previous posts on the Mannheim court's approach to FRAND, see here.  For the two previous posts, see here and here.

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